Since the early 1990s, when pension plan sponsors began in earnest to convert their DB plans to DC, Canada has seen a sustained shift in the pension landscape. Between 1991 and 2006, according to Statistics Canada, the number of members covered by employer-sponsored DB plans shrunk by 4%, while DC membership grew by 93%.
Since 2006, changes in markets and interest rates have led to a drop in the average capital accumulation plan (CAP) member’s replacement income ratio—to 62%, down from 88%, according to Eckler’s CAP Income Tracker (CAPit)
Following our third market meltdown in the past decade, the fashion maxim “everything old is new again” may apply to annuities as well.
Revisiting the plan sponsor’s role in the retirement process. In the aftermath of the market meltdown, plan members nearing retirement are more fearful than ever about their financial security. Defined contribution (DC) members are worried about having to postpone their retirement and may have lost confidence in their ability to invest their retirement nest eggs. […]